The liver is the largest visceral organ in the body and the hepatocytes represent 90% of the volume of the liver. A common progenitor cell shared by the liver and pancreas during embryogenesis and a similar glucose sensing system shared between the hepatocytes and pancreatic beta cells make the hepatocytes an attractive target for its transdifferentiation into insulin-producing cells for beta cell replacement therapy in patients with diabetes. We have previously demonstrated that hepatic stem cells can be induced to differentiate into functional insulin-producing cells using an in-vitro differentiation protocol. To increase the efficiency of the transdifferentiation, we have recently introduced a "master-control gene" in pancreas development, Pdx-1-VP16, a modified activated form of Pdx-1, into the hepatocytes in the liver of the mice and converted 5-10% of hepatocytes into pancreatic cells, which normalized blood glucose levels in diabetic mice by producing insulin in the liver. Furthermore, we have also established a stably transfected hepatic cell line containing Pdx-1-VP16 and an eGFP reporter gene driven by rat insulin promoter to study the underlying the molecular mechanisms of the liver to pancreas transdifferentiation. In this proposal, we will test the hypothesis that multiple elements including genes related to beta cell development and functions as well as beta cell stimulating factors are required to selectively transdifferentiate the hepatocytes into pancreatic insulin-producing cells. The goal will be achieved in the following two specific aims: First, we will determine factors critical for a selective transdifferentiation of liver cells into pancreatic endocrine cells in vivo using a hydrodynamic-based tail vein injection to deliver the target genes including Pdx-1, Pax-4, NeuroD/Beta2, Ngn3, and Islet I into normal mice and diabetic conditions to determine roles of each gene in the liver to pancreas transdifferentiation. Second, we will investigate molecular mechanisms of the transdifferentiation mediated both by transcription factors delivered and by beta cell stimulating factors using stably transfected hepatic cell lines. Once the goal is achieved, we will expand our observations to the primary human hepatocytes immortalized with human telomerase (PHH-hTERT) and transplant the genetically modified hepatocytes into diabetic NOD-scid mice to test their functionality in vivo to reverse diabetes.